Definition
The form a business uses to report payments to independent contractors; for payments made in 2026 the threshold is generally $2,000.
What it means
Form 1099-NEC reports nonemployee compensation, such as fees paid to freelancers and independent contractors for services in the course of a trade or business. For payments made before 2026, the reporting threshold was $600. Under a 2025 law, for payments made after 2025 a business generally files Form 1099-NEC for each nonemployee paid at least $2,000 in the year, and the threshold will be adjusted for inflation starting in 2027. The form is due to the contractor and the IRS by January 31. Businesses usually collect Form W-9 from contractors to get their taxpayer identification number. Contractors must report all self-employment income, whether or not they receive a 1099. Payments to corporations are generally exempt, with some exceptions such as attorney fees.
Example
A bakery that pays a freelance designer $2,500 in 2026 generally files a 1099-NEC for $2,500. A contractor paid $1,500 might receive no form but must still report the $1,500 as income.
Illustrative numbers only. Your situation will differ.